Social Responsibility of

Business

Introduction
Business is an integral part of society.
Business affects and is affected by the
society. The two way relationship must be
healthy and positive for the social and
economic development of a country. For the
business to contribute to the development
of the society it is important that the
business practices are honest, fair and
transparent.

Corporate social
Responsibility

There is a two way relationship between

business and society. Business affects the
different segments of society and is
affected by them. The different segment
are also know as publics or stakeholders
with which it deals directly or indirectly and
which have direct or indirect stake in the
business. The segments are both internal
and external.

Dimensions of Social
Responsibility

Responsibility towards Stockholders

Responsibility towards Employees
Responsibility towards Consumers
Responsibility towards suppliers
Responsibility towards Competitors
Responsibility towards Government
Responsibility towards Local Community

Responsibility Towards
Stockholders
Stockholders are the owners of the business firm
who have a direct stake in it. This is the class
of people who have risked their capital and it is
the primary responsibility of a firm to protect
the capital and provide a fair or reasonable
return to the owners in the long run. Not only
this the firm should strive for a reasonable
stability of the dividend income of owners.
Shareholders have a right to know how their
resources are being used and how the business
of the firm is conducted. That means there
should be reasonable degree of transparency.

Responsibility towards
Employees

Employees including all the categories of workers and

managers are the human resources on the strength of
whom a firm operated in the competitive environment
of the market.
a. The firm must provide a fair compensation system
including wages and salaries, facilities, amenities and
perquisites to commensurate with work environment
and status.
b. To provide fair work standards and provide welfare
facilities including healthcare, sanitation, education
and basic facilities like water supply and housing.
c. Must provide training and development facilities
d. Must recognize, appreciate and support
e. Must listen suggestions and grievances

Responsibility towards
Consumers

Consumers are the foundation of business and all the

operations of the firm are directed to meet consumer
needs and problems. A dissatisfied customer is a
warning signal to a firm. A business that thrives on
consumer exploitation cannot survive in the long run.
Many business have been able to make quick profits in
the situation of monopoly and consumer distress.
a. Strive to improve product quality through research,
development and innovation
b. Provide goods to consumer at fair or competitive
prices
c. Ensure adequate availability of products in the market
d. Ensure right product standards

Responsibility towards
Suppliers

A business firm procures a variety of material

including machinery, tools, spares, raw material,
finished products and business services like
consultancy, repairs and maintenance etc.
These suppliers are know as industrial suppliers
supplying goods and services that are meant for
further processing or resale. A good relation with
suppliers is essential for lower cost and
continuity of operations. In a situation of
monopsony, the industrial buyer commands a
substantial market power and may tend to
exploit the supplier.

Responsibility towards
Competitors

A socially responsible firm plays a fair game in

competition. It engages itself in healthy
competition by learning the good business
strategies and practices of its competitors. It
does not engage in brand assassination. Firm
should indulge in free and fair competition
and doesn't indulge in monopolistic,
restrictive or unfair trade practices.
Monopolistic practices restrict competition,
retard technological developments and
discourage new investment.

Responsibilities towards
Government

Business organization, which are socially responsible are

good corporate citizens. Their business operations are
legally conforming and contribute to the development
of the industry and the economy. These units are fair
and regular in the payment of various taxes and
charges, provide data as may be required by the
government from time to time. These organization give
preferences to the govt companies in these purchases
of industrial supplies and sell to the government at
relatively lower or concessional rates. Good relations
with government have their own rewards like firms find
it easier to obtain new licenses, credit from public,
sector banks and supply orders from government
organizations.

Responsibility towards Local

Community

It is both in the interest of business and the society

that a business firm takes steps for the economic
and social development of the firm among the
public. Local acceptance is very important as it
ensures support from local masses. Local masses
suffer many problems and disturbances caused by
the firm such as land, water, air, and noise
pollution, decline in agricultural productivity and
shortage of water and power and must be
compensated, at least indirectly.
The firm can compensate by way of parks and
sanitation, establishing educational institutions and
dispensaries and providing employement.